The IMF approved the disbursement of the third tranche (worth $3.3bn) of a stand-by loan to Ukraine. The previous two tranches were released in November 2008 and May, bringing the amount disbursed so far to $10bn, out of a total planned loan of $16.4bn.

• Although the tranche was lower than Prime Minister Yuliya Tymoshenko had hoped (she expected $3.8bn), it will help to stabilise the economy , just as the previous instalments have done already. Moreover, parliament was forced on 24 July to end its protracted stalemate in order to approve the reforms on which the loan is contingent, particularly those in the banking sector.

• However , political considerations are still likely to prevent the implementation of the National Electricity Regulatory Commission's decision to increase natural gas prices for households by 20% from 1 September (and further in 2010). Although the measure is necessary to alleviate state gas company Naftohaz's dire financial condition , Tymoshenko is unlikely to allow it to jeopardise her popularity ahead of her presidential bid in the January 2010 election. 
   
• Therefore, the IMF's scheduled review in November of the country's progress with reform is likely to result in the postponement of the fourth loan tranche ($3.84bn) until next year. More generally , the bitter rivalries between the main political forces are likely to intensify in the remaining months before the presidential election, leading to a risk of renewed paralysis of legislative activity.
• Although the fourth tranche would not directly contribute to paying for Russian gas imports, its postponement, coupled with growing pressure for social spending in the run-up to the presidential vote , would be likely to reduce Ukraine's ability to meet gas payments to Russia. This would rekindle the risk of disruption to gas deliveries, including that destined for Europe.